If the Media Flunked Carbon Economics 101, What Happens When Things Get Harder?

Veteran journalist Eric Pooley in January issued a powerful critique of the American press and its coverage of the 2008 cap-and-trade debate in the U.S. Senate. His central insight was that the “he said, she said” stenography that had once plagued coverage of climate science may be migrating into the climate change economics/policy debate.

“If coverage of climate science is an at-risk adolescent,” Pooley, a contributor to Time and former managing editor of Fortune, wrote in his study for the Joan Shorenstein Center on the Press, Politics and Public Policy, “then coverage of climate policy is an infant threatened by crib death.”

News Analysis and CommentaryAccording to his analysis of 40 articles about the Lieberman-Warner cap-and-trade bill of 2008, many reporters gave equal value to dubious industry-funded economic studies, chiefly a flawed report by the National Association of Manufacturers. Conversely, what he saw as a solid study by Environmental Defense Fund, consolidating economic research across a broad spectrum, got shorter shrift than it deserved, according to Pooley.

The New York Times and The Washington Post were, at times, guilty of not sorting through the economic claims. And lone, scrappy reporters at the St. Louis Post-Dispatch and the Billings Gazette are heroes in Pooley’s eye, illustrating, he wrote, that it doesn’t take an army of policy wonks to figure this stuff out.

Some reporters, in Pooley’s view, were not vetting sources and digging into the numbers. They were ignoring what Pooley sees as a “consensus” among most economists that putting a price on carbon would have only a marginal effect on the economy in the long term – less than 1 percent of GDP by 2030.

Moreover, media reports often disregarded the reality that doing nothing would also have its own very substantial costs.

Pooley uses his evidence to exhort climate journalists to become smarter, more empowered “referees.” They should, he says, “learn the difference between sound economic analysis and weapons of mass persuasion.”

Yet having published his study, which turns its fire chiefly on journalists, he now concedes that the whole ecosystem of information was askew in 2008 – and that didn’t make it easier for the journalists.

In a telephone interview with The Yale Forum, Pooley said he could have been harder on the economists, too, especially those who support cap-and-trade but fixate on small differences, creating “very distracting static.” The economists themselves, he said, are “such a cantankerous bunch that they bicker among themselves,” which of course is a characteristic, and in some cases a hallowed tradition, in many professions.

Pooley also said that, upon reflection, EDF “didn’t do the best job with [selling] their study.” The organization “didn’t have a dumbed-down high-concept headline.”

But the sharp lessons for the media are still valid, he said.

Three Ways of Looking at Pooley

Pooley’s study has its proponents, such as Joseph Romm at the liberal website ClimateProgress.org. And it has prominent critics, such as The New York Times‘ Andy Revkin and The Wall Street Journal‘s Keith Johnson, who writes the “Environmental Capital” blog.

Revkin, who sparred with Romm online over the study, says that it is too focused on cap-and-trade as the panacea to all our climate ills.

“I’m afraid his entire analysis suffers from a big initial presumption – that the most meaningful step in mobilizing the country (and implicitly the world) is getting a price on greenhouse-gas emissions,” he wrote in an e-mail to The Yale Forum and other outlets, also posted on Romm’s blog. “There is still lively discourse over what mix of technology and economic policy can set a course toward accelerated de-carbonization of the global energy menu.”

In an e-mail exchange, Johnson also expressed doubts: “I just don’t believe things are quite as black-and-white as the Pooley report suggests, and that any media outlet that raises questions about some consensus stand is playing into the hands of ‘deniers’ or industry groups.”

Johnson said that the economics considerations contain huge assumptions about the future – and no one has a perfect crystal ball. “Underlying all the headline conclusions,” he said, “is a very fundamental yet arcane debate over what kind of discount rate to apply to future damages and benefits.”

Choosing Among the Converted

Pooley’s scope was circumscribed: a specific piece of cap-and-trade legislation; a discrete set of articles and reporters; two competing sides, with extremely polarized views. While no doubt there can be quibbles on the margins, it makes a strong case within its limits.

What’s unclear is whether the lessons Pooley’s article draws can be extended to today – when the cap-and-trade debate has become, by any measure, more nuanced. (And to say nothing of the fact that the national and global financial crisis will have thrown off economic models and any previous assumptions about economic growth rates.)

Senator Barbara Boxer (D-Ca) and Representative Henry Waxman (D-Ca) have pledged to put together their own cap-and-trade bills this year. And President Obama is committed to the issue. It’s safe to say that the center of the debate has shifted.

In the interview, Pooley said it will be tough for reporters covering some of the most important future debates on the climate change issue.

Take Exhibit A: Last month, the diverse U.S. Climate Action Partnership (CAP) – composed of groups ranging from the Natural Resources Defense Council (NRDC) and EDF to General Motors and Duke Energy – issued a blueprint for a cap-and-trade system. It calls for reducing emissions to some 80 percent of 2005 levels by 2020, and to 20 percent of 2005 levels by 2050. It proposes giving out allowances to companies for free at first, though that system would be phased-out.

It’s all a relatively moderate position – but one that prompted the National Wildlife Federation to drop out of the U.S. CAP. And it’s also weaker than positions advocated by the Union of Concerned Scientists, Greenpeace, Friends of the Earth, the Center for American Progress, and some officials who now work in the Obama administration.

Many want deeper cuts faster, with more punitive measures on companies. Others, like U.S. CAP, see a window of political opportunity and think a decent compromise is the best path. It’s essentially a political debate, one that involves calculations about timing and viability.

“You’ve got a philosophical difference there, and it’s a profound one,” Pooley said in the interview. “I don’t think the economists can decide that one.”

Moreover, there are heated debates over whether to initially issue permits to companies for free, or whether to auction them; whether to allow companies to purchase offsets abroad; and how properly to spend the money generated by the permits. Economists line up on all different sides of these issues.

Widening the Playing Field

There’s another slow-burning area of challenge for climate journalists: what to make of the competing, parallel track of a “carbon tax.” That might be a relatively simpler way to make companies pay for greenhouse gas emissions, without a potentially Byzantine market of carbon permit trading to be set up (the kind that Europe has had trouble with).

Pooley points out that there are some prominent figures who have backed the carbon tax position: Larry Summers, Obama’s chief economic advisor; Robert Shapiro, former official in President Clinton’s administration; and Harvard professor and Democratic Party luminary Elaine Kamarck, a former advisor to Al Gore.

“There are people in the climate community who are worried that a carbon tax will gain enough momentum to kill cap-and-trade, but not enough to pass itself,” Pooley said in the interview.

Which is all to say that reporting responsibly between that carbon tax crowd and proponents of all stripes of cap-and-trade is not easy. (Bradford Plumer has a useful side-by-side analysis of the two at The New Republic‘s “Environment and Energy” blog.) No iron-clad “consensus” among economists is likely to emerge. It’s not like choosing between the National Association of Manufacturers, on the one hand, and a few hundred crack academic economists on the other.

Most left-leaning environmental and energy analysts – and Pooley himself – agree that cap-and-trade will promote clean-energy innovation faster than a carbon tax will. And that may be a decisive consideration. But that’s where the clean comparisons may end.

Some would disagree, of course.

“The playing field has gotten bigger,” Tony Kreindler, media director for climate issues at EDF, said in a phone interview with The Yale Forum. “… But when it comes to the economics, I don’t think things have changed one bit.” He noted that the EDF-backed U.S. CAP proposal tries to find the “sweet spot” and takes into account “what’s politically feasible.”

EDF hopes that the corporate CEOs getting behind such a bill – and saying that climate action can actually help grow their companies – might just “take this out of the realm of modeling” altogether, Kreindler said.

Modeling Morality

In any case, one bill, perhaps Waxman’s, may finally get its day in the sun, just in time for the Copenhagen Climate Summit at year’s end. Any of the competing factions in the U.S., though, could derail a perfectly decent bill, ending in more U.S. inaction with the world watching and waiting.

So analyzing these very difficult options could be just as important as negotiating the stormy seas between the opposing sides from the Lieberman-Warner debate. But unlike the 2008 debate that Pooley dissects, there may be no consensus among economic voices to help guide journalists this time.

The global context matters here. Assertions continue to fly that even if a U.S. cap-and-trade scheme might make sense economically, it won’t make enough of a difference in avoiding climate disaster unless India and China also act. Over time and with a recovery from the worldwide recession, their long-term growth could keep greenhouse gas levels growing and growing.

That raises issues about how essential U.S. cap-and-trade really is – and speaks to Revkin’s point that some other or additional mix of technological remedies may be worth focusing on.

But it also raises a deeper point. If philosophy gets beyond the scope of economic analysis on cap-and-trade, so certainly do ethics. There may be a need to do something grand and fast for reasons of “modeling” – but not in the financial sense.

“We in the U.S. were the first folks to cause the mess, and we have to be the first folks to start cleaning the mess,” Adil Najam, a professor at Boston University and a lead author of the IPCC report that won the Nobel Prize, said in a Yale Forum interview. “Only then will we have the moral legitimacy to ask others to pitch in.

John Wihbey

A regular contributor to Yale Climate Connections, John Wihbey is an editor and researcher at the John F. Kennedy School of Government at Harvard. (E-mail: john@yaleclimateconnections.org, Twitter: @wihbey)

John, thank you for this piece. My Kennedy School article is called a ‘discussion paper’ in hopes of triggering discussions like this one. I would like to respond to a few of the points made in your article.

Just to be clear, I have never claimed that cap and trade is a panacea or the only policy response needed — of course we need a vast suite of solutions, and there are countless heartening developments unfolding in the absence of a cap. But I do think Andy Revkin underestimates the potential impact of pricing carbon, either through a tax or a mandatory, declining cap. If either became law it would be a powerful accelerator of the transition to a clean energy economy, unleashing a level of private investment far beyond anything the federal government can spend. Either would generate a great deal of money for R&D and an energy-price cushion for consumers. But a cap, in my view, is more likely to get the votes needed to pass — no small matter — and has two added advantages. You allude to one of them: a cap creates a stronger profit motive for reducing emissions. The second is also significant. Unlike a tax, a cap (assuming it’s not undermined by a badly designed safety valve) requires a mandatory declining level of emissions – - the only way we can be sure that we’re doing something (to borrow a phrase from Andy) that the atmosphere might actually notice. There’s reason to be skeptical of Washington’s ability to produce a good cap-and-trade bill, which is obviously one reason we need an informed, vigilant press and public. But I’m not sure a tax would be any cleaner. Last time I checked, the IRS code was not a model of transparency and simplicity. The main thing is to do one or the other as soon as possible – - and as John mentions, there’s reason to be worried that the carbon tax could derail support for cap-and-trade but not muster enough support to pass, leaving us with neither. That would be a tragedy.

Keith Johnson’s Environmental Capital blog is an important home for discussion of these economic issues. So I’m a bit disappointed to read what feels like a caricature of my argument from Keith. I don’t argue that “any media outlet that raises questions about some consensus stand is playing into the hands of ‘deniers’ or industry groups.” (The fact is, media outlets haven’t been raising questions about the economic consensus. They haven’t been writing about it at all or exploring whether a consensus has even emerged, as I argue it has. This is fertile ground for reporting, and I hope Keith and others will wade into it.) I argue that journalists should not take economic forecasts from ANY group at face value. Journalists need to get under the hood, inspect the assumptions that are fed into these forecasts, and help their readers understand who is skewing the assumptions in order to create forecasts that buttress their own point of view. As my paper makes clear, combatants on all sides of the debate have been guilty of this. The worst and most influential offenders, in my view, have been the two industry-backed studies by CRA and NAM/ACCF. The crucial barometer here isn’t discount rate but the adoption rates of alternative energy technologies. (Discount rate looms large in the act-now-or-act-later argument, less so in the debate over the cost of short-and medium-term action.) CRA and NAM/ACCF assume that our transition to a clean energy economy has already peaked. NAM/ACCF, for instance, assumes that we will adopt no more wind power in coming years than we brought online in 2007. I’m simply asking that reporters who cover this beat start looking for those sorts of red flags and — wherever they find them, on whichever side of the fight — alert their readers to them. That’s what I call being an honest referee. It doesn’t assume that anything is black and white, but it may help us navigate this world of grays. It is not a world in which economists can help us answer every question. But economics — the cost of climate action — will remain the primary battleground as Congress considers legislation in the next year or two. In other words, this discussion isn’t going away.

While I believe that a revenue-neutral carbon tax is superior to a cap and trade system, what I find truly objectionable is the lack of a full and open debate on the subject. By settling on one solution before the merits of all the alternatives are explored, how can we possibly expect to achieve the best result?

I’m not at all convinced that this statement is true. Sure, a strong cap will promote clean energy faster than a weak tax, but given a tax with a price of $30/ton and a cap that leads to a $30/ton price, I don’t see why one acts more strongly than the other. And a number of prominent left-leaning analysts like Hansen and the majority of the environmental economics world seem to favor a tax in a perfect world (though all would agree that whichever is more likely to be implemented is superior)

And given the history of cap and trade programs (EU ETS, RGGI, SO2 in the 1990 CAA amendments) it seems likely that any cap that gets passed will end up much less expensive than the original estimates. So the choice might end up being between a $30/ton tax and a $5/ton cap and trade.

I find it interesting and disturbing that these posters talk in the past tense about the debate over “climate change” causation. Indeed, given some of the recent scientific literature(http://www.agu.org/pubs/crossref/2009/2008JD011637.shtml), statements of reputable scientists (for example, Dr. Brian G. Valentine of the U.S. Department of Energy, page 188 of the 2009 U.S. Senate Report of More Than 700 Dissenting Scientists on Global Warming) and changes of position within the scientific community, it seems more honest to say the causation debate is far from over and the extent to which the media fails to make this clear suggests to me that if there is a bias in the media it is the opposite to what Mr. Pooley contends.

Chemist Dr. Mark L. Campbell, a professor of chemistry at the U.S. Naval Academy in Annapolis, MD, who has published numerous studies in the Journal of the American Chemical Society on topics such as methane, squarely blames the media for promoting unfounded climate fears. “The sky is not burning, and to claim that it is amounts to journalistic malpractice…the press only promotes the global warming alarmists and ignores or minimizes those of us who are skeptical,” Chapman wrote on January 13, 2009.

“Scientists across the globe are catching on — global warming is not real science. There is a sucker born every minute who believes in it, and Al Gore is playing the role of P.T. Barnum,” Chemist Max S. Strozier declared on December 22, 2009 in an email to the minority staff of the Environment and Public Works Committee. Strozier spent 26 years specializing in chemical laboratory analysis, served as a U.S. Department of Defense aerospace chemist and is a former lecturer at San Jose State University and the University of Texas.